ITEM 1A. RISK FACTORS
You should carefully consider these factors
that may affect future results, together with all the other information included in this Report in evaluating our business. The risks
and uncertainties described below are those that we currently believe may materially affect our business and results of operations. Additional
risks and uncertainties that we are unaware of or that we currently deem immaterial also may become important factors that affect our
business and results of operations. Our shares of common stock involve a high degree of risk and should be purchased only by investors
who can afford a loss of their entire investment. Prospective investors should carefully consider the following risk factors concerning
our business before making an investment.
In addition, you should carefully consider
these risks when you read “forward-looking” statements elsewhere in this Report. These are statements that relate to our expectations
for future events and time periods. Generally, the words “anticipate,” “expect,” “intend,” and similar
expressions identify forward-looking statements. Forward-looking statements involve risks and uncertainties, and future events and circumstances
could differ significantly from those anticipated in the forward-looking statements.
Forward-Looking Statements and Associated Risks
We operate in a competitive and rapidly changing
environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact
of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained
in any forward-looking statement. The forward-looking statements in this Report are based on assumptions management believes are reasonable.
However, due to the uncertainties associated with forward-looking statements, you should not place undue reliance on any forward-looking
statements. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim
any obligation or undertaking to publicly update any of them in light of new information, future events, or otherwise.
Summary of Risks Associated with Our Business
Our business is subject to numerous risks and
uncertainties that you should consider before investing in our company. These risks are described in more detail in the section titled
“Risk Factors” in Item 1A of this Report. These risks include, but are not limited to, the following:
· We currently have no commercial revenue and may never become profitable.
· You may experience future dilution as a result of future equity offerings.
Risks Related to Our Financial Position, FDA
Clinical Hold, Need for Additional Capital and Overall Business
We are a biotechnology company
with limited resources, a limited operating history, and no products approved for clinical trials or commercial sale, which may make it
difficult to evaluate our current business and predict our future success and viability.
We are a biotechnology company focused on developing
cellular therapies for cancer based upon a proprietary cellulose-based live cell encapsulation technology known as “Cell-in-a-Box®.”
In recent years, we have devoted substantially all our resources to the development of our product candidates for LAPC. We have limited
resources, a limited operating history, no products approved for clinical trials or commercial sale and therefore have not produced any
revenues. We have generated significant operating losses since our inception. Our net losses attributable to common stockholders for the
years ended April 30, 2024, and 2023 were approximately $17.2 million and $4.3 million, respectively. As of April 30, 2024, we had an
accumulated deficit of approximately $115.6 million. Substantially all our losses have resulted from expenses incurred relating to our
research and development programs and from general and administrative expenses and operating losses associated with our business.
We expect to continue to incur significant expenses
and operating losses for the foreseeable future. We anticipate these losses will increase as we continue our research and development
of, and, if approved by the FDA, commence clinical trials for, our product candidates. In addition to budgeted expenses, we may encounter
unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.
We have no facilities to conduct fundamental research
and we have performed our research and development activities by collaboration with contract service providers, and contract manufacturers
and by designing and developing research programs in collaboration with university-based experts who work with us to evaluate mechanism(s)
of disease for which we have designed and developed product candidates. We have not maintained a principal laboratory or primary research
facility for the development of our product candidates.
Biotechnology product development is a highly
uncertain undertaking and involves a substantial degree of risk. We have not commenced or completed clinical trials for any of our product
candidates, obtained marketing approval for any product candidates, manufactured a commercial scale product, or arranged for a third party
to do so on our behalf, or conducted sales and marketing activities necessary for successful product commercialization. Given the highly
uncertain nature of biotechnology product development, we may never commence or complete clinical trials for any of our product candidates,
obtain marketing approval for any product candidates, manufacture a commercial scale product or arrange for a third party to do so on
our behalf, or conduct sales and marketing activities necessary for successful product commercialization.
Our limited operating history as a company makes
any assessment of our future success and viability subject to significant uncertainty. We will encounter risks and difficulties frequently
experienced by early-stage biotechnology companies in rapidly evolving fields, and we have not yet demonstrated an ability to successfully
overcome such risks and difficulties. If we do not address these risks and difficulties successfully, our business, operating results
and financial condition will suffer.
As a result of the clinical hold that has
been placed on our IND by the FDA, it has taken and may continue to take considerable time and expense to respond to the FDA and no assurance
can be given that the FDA will remove the clinical hold in which case our business and prospects will likely suffer material adverse consequences.
On October 1, 2020, we received notice from the
FDA that it had placed our IND for a planned clinical trial in LAPC on clinical hold. As part of the clinical hold process, the FDA has
asked for additional information, tasks to be performed by us and new preclinical studies and assays. It has taken and may continue to
take a considerable period of time, the length of which is not certain at this time, for us to conduct such tasks and preclinical studies
and to generate and prepare the requested information. It is possible that the service providers that we will utilize for such work may
have considerable backlogs and/or are suffering from slowdowns as a result of COVID-19 and supply chain disruptions and may not be able
to perform such work for an extended period of time. Even if we are able to fully respond to the FDA’s requests, the agency may
subsequently make additional requests that we would need to fulfill prior to the lifting of the clinical hold and we may never be able
to begin our clinical trial in LAPC, obtain regulatory approval or successfully commercialize our product candidates. An inability to
conduct our clinical trial in LAPC as a result of the clinical hold or otherwise, would likely force us to terminate our clinical development
plans. It is possible that we will be unable to fully respond to the FDA in a satisfactory manner, and as a result the clinical hold may
never be lifted. If the clinical hold is not lifted or if the lifting takes an extended period of time, our business and prospects will
likely suffer material adverse consequences.
We contract with Austrianova for the manufacture
of our product candidates for preclinical studies and clinical trials, if allowed to proceed, and expect to continue to do so for commercialization.
This reliance on Austrianova increases the risk that we will not have sufficient quantities of our product candidates or such quantities
at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.
We do not currently own or operate manufacturing
facilities to produce our encapsulated live cell product candidates for cancer. We rely on and expect
to continue to rely on Austrianova to manufacture supplies of our product candidates for preclinical studies and clinical trials, if allowed
to proceed, as well as for commercial manufacture of our product candidates, and these must be maintained for us to receive marketing
approval for our product candidates.
Our encapsulated live cell product candidates
must be manufactured through complex, multi-step synthetic processes that are time-consuming and involve special conditions at certain
stages. Biologics and drug substance manufacture requires high potency containment, and containment under aseptic conditions. Any performance
failures on the part of our existing or future manufacturers could delay clinical development or marketing approval of our product candidates.
Moreover, the facilities that produce our Cell-in-a-Box® capsules are unique to us and would not be replicable or replaceable
promptly, if at all, if those facilities become unavailable or are damaged or destroyed through an accident, natural disaster, labor disturbance
or otherwise.
If Austrianova should become unavailable to us
for any reason, we may incur additional cost or delay in identifying or qualifying a replacement manufacturer. At this time, we are unaware
of any available substitute manufacturer other than Austrianova. In addition, while we believe that our existing manufacturer, Austrianova,
can produce our product candidates, if approved, in commercial quantities, we may also need to identify a third-party manufacturer capable
of providing commercial quantities of our product candidates. If we are unable to arrange for such a third-party manufacturing source
or fail to do so on commercially reasonable terms and in a timely manner, we may not be able to successfully produce and market our encapsulated
live cell and ifosfamide product, if approved, or any other product candidate or may be delayed in doing so.
Even if we can establish such arrangements with
another third-party manufacturer, reliance on a new third-party manufacturer entails additional risks, including:
· Reliance on the third party for regulatory compliance and quality assurance;
· The possible breach of the manufacturing agreement by the third party;
A new third-party manufacturer may not be able
to comply with cGMP standards or the requirements of a regulatory agency. Our failure, or the failure of our third-party manufacturer,
to comply with these practices or requirements could result in sanctions being imposed on us, including additional clinical holds, fines,
injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates
or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our product
candidates.
Delays in the cGMP certification of the Austrianova
manufacturing facility in Bangkok, Thailand could affect its ability to manufacture encapsulated live cells on a timely basis and could
adversely affect supplies of our product candidates for clinical trials and to market.
Our product candidates that we may develop may
compete with other product candidates and products for access to manufacturing facilities. There are a limited number of manufacturers
that operate under cGMP regulations and that might be capable of manufacturing products for us.
In addition, we expect to rely on Austrianova
to purchase from third-party suppliers the materials necessary to produce our product candidates for our clinical studies, if allowed
to proceed. There are a small number of suppliers for certain equipment and raw materials that are used in the manufacture of our product
candidates. Such suppliers may not sell these raw materials to Austrianova at the times we need them or on commercially reasonable terms.
For example, there is from time to time a limited supply of acceptable cell media for production of our MCB. We do not have any control
over the process or timing of the acquisition of these raw materials by Eurofins or Austrianova. Moreover, we currently do not have any
agreements for the commercial production of these raw materials. Austrianova from time to time has experienced significant supply chain
disruptions, some of which may be related to COVID-19, and we believe it is experiencing liquidity issues. Any further significant delay
in the supply of a product candidate or the raw material components thereof our clinical trials, if allowed to proceed, due to the need
to replace a third-party supplier of these raw materials could considerably delay completion of our clinical studies, product testing
and potential regulatory approval of our product candidates. If we are unable to purchase these raw materials after regulatory approval
has been obtained for our product candidates, the commercial launch of our product candidates, if approved, would be delayed or there
would be a shortage in supply, which would impair our ability to generate revenues from the sale of our product candidates.
Our current and anticipated future dependence
upon Austrianova and others for the manufacture of our product candidates may adversely affect our future profit margins and our ability
to commercialize any products that receive marketing approval on a timely and competitive basis.
Disruptions in the global economy
and supply chains may have a material adverse effect on our business, financial condition and results of operations and the financial
condition of the third parties on which we rely, including Austrianova.
The disruptions to the global economy in recent
years have impeded global supply chains, resulting in longer lead times and also increased critical component costs and freight expenses.
Austrianova, a third-party supplier on whom we rely, from time to time has experienced significant supply chain disruptions, some of which
may be related to COVID-19, and we believe it may be experiencing liquidity issues. Despite any actions we have undertaken to minimize
the impacts from disruptions to the global economy, there can be no assurances that unforeseen future events in the global supply chain,
inflationary pressures, and delays our third parties face will not have a material adverse effect on our business, financial condition
and results of operations.
The recent and ongoing COVID-19
pandemic could materially affect our operations, as well as the business or operations of third parties with whom we conduct business.
Our business could be adversely affected by the effects of other future health pandemics in regions where we or third parties on which
we rely have significant business operations.
We face the ongoing risk that the coronavirus
pandemic may slow our operations, our preclinical studies or the eventual enrollment of our planned clinical trial. In order to prioritize
patient health and that of the investigators at clinical trial sites, we may need monitor enrollment of patients in our clinical study.
In addition, some patients may be unwilling to enroll in our trials or be unable to comply with clinical trial protocols if quarantines
or travel restrictions impede patient movement or interrupt healthcare services. These and other factors outside of our control could
delay our ability to conduct clinical trials or release clinical trial results. In addition, the effects of the ongoing coronavirus pandemic
may also increase non-trial costs such as insurance premiums, increase the demand for and cost of capital, increase loss of work time
from key personnel, and negatively impact our key clinical trial vendors. We cannot guarantee that COVID-19 or any other public health
crisis will not cause delays or impact on our business or proposed clinical trial.
If we are unable to successfully
raise additional capital, our future clinical trials and product development could be limited, and our long-term viability may be threatened.
We have experienced negative operating cash flows
since our inception and have funded our operations primarily through sales of our equity securities. We may need to seek additional funds
in the future through equity or debt financings, or strategic alliances with third parties, either alone or in combination with equity
financings to complete our product development initiatives. These financings could result in substantial dilution to the holders of our
common stock or require contractual or other restrictions on our operations or on alternatives that may be available to us. If we raise
additional funds by issuing debt securities, these debt securities could impose significant restrictions on our operations. Any such required
financing may not be available in amounts or on terms acceptable to us, and the failure to procure such required financing could have
a material and adverse effect on our business, financial condition and results of operations, or threaten our ability to continue as a
going concern.
Our operating and capital requirements during
this fiscal year and thereafter will vary based on several factors, including whether we can complete the studies requested by the FDA
with respect to our IND filing, whether the FDA allows us to commence our planned clinical trial for LAPC, how quickly enrollment of patients
in our such trial can be commenced, the duration of the clinical trial and any change in the clinical development plans for our product
candidates and the outcome, timing and cost of meeting regulatory requirements established by the FDA and the EMA or other comparable
foreign regulatory authorities.
Our present and future capital requirements will be significant and
will depend on many factors, including:
· whether the FDA lifts the clinical hold on our IND filing for LAPC;
· the costs, timing and outcome of regulatory review of our product candidates;
· the effect of competing technological and market developments;
· market acceptance of our product candidates;
We may not be able to acquire additional funds
on acceptable terms, or at all. If we are unable to raise adequate funds, we may have to liquidate some or all of our assets, or delay
or reduce the scope of or eliminate some or all of our development programs. Further, if we do not have, or are not able to obtain, sufficient
funds, we may be required to delay planned and future clinical trials, including the pig study, and development or commercialization of
our product candidates. We also may have to reduce the resources devoted to our product candidates or cease operations. Any of these factors
could harm our operating results.
Due to the significant resources
required for the development of our programs, and depending on our ability to access capital, we must prioritize development of certain
product candidates. We may expend our limited resources on programs that do not yield a successful product candidate and fail to capitalize
on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.
We seek to maintain a process of prioritization
and resource allocation to maintain an optimal balance between aggressively advancing lead programs and ensuring replenishment of our
portfolio. Until such time, if ever, as the FDA lifts its clinical hold on our IND related to our planned clinical trial in LAPC, our
Cell-in-a-Box® encapsulation technology is validated in our planned clinical trial, and sufficient additional funding
is available, we have halted spending on behalf of our development program with respect to cannabinoids.
Due to the significant resources required for
the development of our programs, we must focus our programs on specific diseases and decide which product candidates to pursue and advance
and the amount of resources to allocate to each. Our decisions concerning the allocation of research, development, collaboration, management
and financial resources toward particular product candidates or therapeutic areas may not lead to the development of any viable commercial
product and may divert resources away from better opportunities. Similarly, our potential decisions to delay, terminate or collaborate
with third parties in respect of certain programs may subsequently also prove to be suboptimal and could cause us to miss valuable opportunities.
We may fail to capitalize on viable commercial products or profitable market opportunities, be required to forego or delay pursuit of
opportunities with other product candidates or other diseases that may later prove to have greater commercial potential than those we
choose to pursue, or relinquish valuable rights to such product candidates through collaboration, licensing or other royalty arrangements
in cases in which it would have been advantageous for us to invest additional resources to retain sole development and commercialization
rights. If we make incorrect determinations regarding the viability or market potential of any or all of our programs or product candidates
or misread trends in the biotechnology industry, our business, prospects, financial condition and results of operations could be materially
adversely affected.
We currently have no commercial revenue
and may never become profitable.
Even if we can successfully achieve regulatory
approval for our product candidates, we do not know what the reimbursement status of our product candidates will be or when any of these
products will generate revenue for us, if at all. We have not generated, and do not expect to generate, any product revenue for the foreseeable
future. We expect to continue to incur significant operating losses for the foreseeable future due to the cost of our research and development,
preclinical studies and clinical trials and the regulatory approval process for our product candidates. The amount of future losses is
uncertain and will depend, in part, on the rate of growth of our expenses.
Our ability to generate revenue from our product
candidates also depends on numerous additional factors, including our ability to:
We are unable to predict the timing or amount
of increased expenses, or when or if we will be able to achieve or maintain profitability. Even if we can complete the processes described
above, we anticipate incurring significant costs associated with commercializing our product candidates.
To date, we have generated no revenue. Our ability
to generate revenue and become profitable depends upon our ability to obtain regulatory approval for, and successfully commercialize,
our product candidates that we may develop, in-license or acquire in the future.
We face substantial competition,
which may result in others discovering, developing or commercializing competing products before or more successfully than we do.
The development and commercialization of new drug
products is highly competitive. We face competition with respect to our current product candidates. We will face competition with respect
to any product candidates that we may seek to develop or commercialize in the future. Such competition may arise from major pharmaceutical
companies, specialty pharmaceutical companies and biotechnology companies worldwide. There are several large pharmaceutical and biotechnology
companies that currently market products or are pursuing the development of products for the treatment of the disease indications for
which we are developing our product candidates. Some of these competitive products and therapies are based on scientific approaches that
are entirely different from our approach. Potential competitors also include academic institutions, government agencies and other public
and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research,
development, manufacturing and commercialization.
Specifically, there are numerous companies developing
or marketing therapies for cancer, including many major pharmaceutical and biotechnology companies. Our commercial opportunity could be
reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe
side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain regulatory
approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong
market position before we can enter the market.
Many of the companies against which we are competing
or against which we may compete in the future have significantly greater financial resources and expertise in research and development,
manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we
do. Mergers and acquisitions in the pharmaceutical and biotechnology sectors may result in even more resources being concentrated among
a smaller number of our competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly
through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining
qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well
as in acquiring technologies complementary to, or necessary for, our programs.
Our future revenues are unpredictable
which causes potential fluctuations in operating results.
Because of our limited operating history as a
biotech company; we are currently unable to accurately forecast our revenues. Future expense levels will likely be based largely on our
marketing and development plans and estimates of future revenue. Any sales or operating results will likely generally depend on volume
and timing of orders, which may not occur and on our ability to fulfill such orders, which we may not be able to do. We may be unable
to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenues
in relation to planned expenditures could have an immediate adverse effect on our business, prospects, financial condition and results
of operations. Further, as a strategic response to changes in the competitive environment, we may from time to time make certain pricing,
service or marketing decisions that could have a material adverse effect on our business, prospects, financial condition and results of
operations.
We may experience significant fluctuations in
future operating results due to a variety of factors, many of which are outside of our control. Factors that may affect operating results
include: (i) the ability to obtain and retain customers; (ii) our ability to attract new customers at a steady rate and maintain customer
satisfaction with products; (iii) our announcement or introduction of new products by us or our competitors; (iv) price competition; (v)
the level of use and consumer acceptance of its products; (vi) the amount and timing of operating costs and capital expenditures relating
to expansion of the business, operations and infrastructure; (vii) governmental regulations; (viii) general economic conditions; (ix)
delays or disruptions in our supply chain; and (x) the adverse impacts caused by COVID-19.
We may be unable to adequately protect our
information systems from cyberattacks, which could result in the disclosure of confidential or proprietary information, including personal
data, damage our reputation, and subject us to significant financial and legal exposure.
We rely on information technology
systems that we or our third-party providers operate to process, transmit and store electronic information in our day-to-day operations.
In connection with our product discovery efforts, we may collect and use a variety of personal data, such as name, mailing address, email
addresses, phone number and clinical trial information. A successful cyberattack could result in the theft or destruction of intellectual
property, data, or other misappropriation of assets, or otherwise compromise our confidential or proprietary information and disrupt our
operations. Cyberattacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect.
Cyberattacks could include wrongful conduct by hostile foreign governments, industrial espionage, wire fraud and other forms of cyber
fraud, the deployment of harmful malware, denial-of-service, social engineering fraud or other means to threaten data security, confidentiality,
integrity and availability. A successful cyberattack could cause serious negative consequences for us, including, without limitation,
the disruption of operations, the misappropriation of confidential business information, including financial information, trade secrets,
financial loss and the disclosure of corporate strategic plans. Although we devote resources to protect our information systems, we realize
that cyberattacks are a threat, and there can be no assurance that our efforts will prevent information security breaches that would result
in business, legal, financial or reputational harm to us, or would have a material adverse effect on our results of operations and financial
condition. Any failure to prevent or mitigate security breaches or improper access to, use of, or disclosure of our clinical data or patients’
personal data could result in significant liability under state (e.g., state breach notification laws), federal (e.g., HIPAA, as amended
by HITECH), and international law (e.g., the GDPR) and may cause a material adverse impact to our reputation, affect our ability to conduct
new studies and potentially disrupt our business.
In addition, the computer
systems of various third parties on which we rely, and other contractors, consultants and law and accounting firms, may sustain damage
from computer viruses, unauthorized access, data breaches, phishing attacks, cybercriminals, natural disasters (including hurricanes and
earthquakes), terrorism, war and telecommunication and electrical failures. We rely on our third-party providers to implement effective
security measures and identify and correct for any such failures, deficiencies or breaches. If we or our third-party providers fail to
maintain or protect our information technology systems and data integrity effectively or fail to anticipate, plan for or manage significant
disruptions to our information technology systems, we or our third-party providers could have difficulty preventing, detecting and controlling
such cyber-attacks and any such attacks could result in losses described above as well as disputes with physicians, patients and our partners,
regulatory sanctions or penalties, increases in operating expenses, expenses or lost revenues or other adverse consequences, any of which
could have a material adverse effect on our business, results of operations, financial condition, prospects and cash flows. Any failure
by such third parties to prevent or mitigate security breaches or improper access to or disclosure of such information could have similarly
adverse consequences for us. If we are unable to prevent or mitigate the impact of such security or data privacy breaches, we could be
exposed to litigation and governmental investigations, which could lead to a potential disruption to our business.
Risks Related to Regulatory Matters
If we are unable to obtain, or
if there are delays in obtaining, required approval from the applicable regulatory agencies, we will not be able to commercialize our
product candidates and our ability to generate revenue will be materially impaired.
Our product candidates must obtain marketing approval
from the FDA for commercialization in the U.S. and from foreign regulatory agencies for commercialization in countries outside the U.S.
The process of obtaining marketing approvals in the countries in which we intend to sell and distribute our product candidates is expensive
and can take many years if approval is obtained at all. This process can vary substantially based upon a variety of factors, including
the type, complexity and novelty of the product candidates involved. Failure to obtain marketing approval for a product candidate will
prevent us from commercializing that product candidate. To date, we have not received approval to market any of our product candidates
from regulatory agencies in any jurisdiction. We have no experience in filing and supporting the applications necessary to gain marketing
approvals and expect to rely on third-party contract research organizations to assist us in this process. Securing marketing approval
requires the submission of extensive preclinical and clinical data and supporting information to the regulatory agencies for each product
candidate to establish the product candidate’s safety and efficacy. Securing marketing approval also requires the submission of
information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory agencies.
Our product candidates may not be effective, may
be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may
preclude our obtaining marketing approval or prevent or limit commercial use. Regulatory agencies have substantial discretion in the approval
process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical,
clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay,
limit or prevent marketing approval of a product candidate. Changes in marketing approval policies during the development period, changes
in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may
also cause delays in or prevent the approval of an application. New cancer drugs frequently are indicated only for patient populations
that have not responded to an existing therapy or have relapsed after such therapies. If we experience delays in obtaining approval or
if we fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability
to generate revenues will be materially impaired.
If allowed to proceed with our
clinical development programs, we intend to conduct clinical trials for certain of our product candidates at sites outside of the U.S.,
and the U.S. regulatory agencies may not accept data from trials conducted in such locations.
The acceptance of data from clinical trials conducted
outside the U.S. by the FDA may be subject to certain conditions or may not be accepted at all, and other comparable non-U.S. regulatory
authorities may have similar restrictions and conditions with respect to clinical trials conducted outside of their respective jurisdictions.
In cases where data from clinical trials conducted wholly outside of the U.S. are intended to serve as the basis for marketing approval
in the U.S., the FDA will generally not accept such foreign trial data unless (i) the data are determined to be applicable to the U.S.
population and U.S. medical practice; (ii) the trials were performed by clinical investigators of recognized competence and pursuant to
GCP regulations; and (iii) the FDA is able to validate the data through an onsite inspection, if necessary. Additionally, the FDA’s
clinical trial requirements, including sufficient size of patient populations and statistical powering, must be met. Many comparable non-U.S.
regulatory authorities have similar approval requirements.
In addition, while these clinical trials are subject
to the applicable local laws, the FDA acceptance of the data will be dependent upon its determination that the trials also complied with
all applicable U.S. laws and regulations. There can be no assurance that the FDA will accept data from trials conducted outside of the
U.S. If the FDA does not accept the data from any of our clinical trials that we determine to conduct outside the U.S., it would likely
result in the need for additional trials that would be costly and time-consuming and delay or permanently halt the development of our
product candidate.
In addition, the conduct of clinical trials outside
the U.S. could have a significant impact on us. Risks inherent in conducting international clinical trials include:
· Foreign exchange fluctuations; and
· Diminished protection of intellectual property in some countries.
Our plan to first pursue a clinical trial
before a pivotal Phase 3 trial will likely result in additional costs to us and resultant delays in the FDA review process and any future
commercialization and marketing if regulatory approval is obtained.
If the FDA allows us to begin a clinical trial
by lifting its clinical hold on our IND, we have determined that the data contained in previous clinical trial reports using the Cell-in-a-Box®
and its Associated Technologies are not sufficient to advance the program to a Phase 3 pivotal trial. Therefore, we are designing
a clinical trial that, if successful, we believe will provide the information necessary to plan a Phase 3 pivotal trial. Our determination
to first conduct a clinical trial before conducting a pivotal Phase 3 clinical trial will likely result in additional costs to us and
resultant delays in the regulatory review process and any future commercialization and marketing if regulatory approval is obtained. The
same is true to a greater extent if the FDA requires us to commence a Phase 1 or other Phase 2 clinical trial instead of the planned Phase
2b clinical trial currently under clinical hold.
Development of a biologic involves a lengthy
and expensive process with an uncertain outcome. We may incur additional costs or experience delays in completing or be unable to complete
the development and commercialization of our product candidates.
Our Cell-in-a-Box® and ifosfamide
combination product candidate has not begun clinical development, and, like others’ candidates in a similar phase of development,
the risk of failure is high. It is impossible to predict when or if this product candidate or any other product candidate will prove effective
or safe in humans or will receive regulatory approval. Before obtaining marketing approval from regulatory agencies for the sale of any
product candidate, if allowed to proceed, we must complete preclinical development and then conduct extensive clinical trials to demonstrate
the safety and efficacy of our product candidates in humans. Clinical trials are expensive, difficult to design and implement, can take
several years to complete and are uncertain as to their outcome. A failure of one or more clinical trials can occur at any stage of a
clinical trial. The clinical development of our product candidates is susceptible to the risk of failure inherent at any stage of drug
development, including failure to demonstrate efficacy in a clinical trial or across a broad population of patients, the occurrence of
medically or commercially unacceptable or severe adverse events, failure to comply with protocols or applicable regulatory requirements
or determination by the regulatory agencies that a drug or biologic product is not approvable. It is possible that even if one or more
of our product candidates has a beneficial effect, that effect will not be detected during clinical evaluation because of one or more
of a variety of factors, including the size, duration, design, measurements, conduct or analysis of our clinical trials. Conversely, because
of the same factors, our clinical trials if allowed to proceed, may indicate an apparent positive effect of a product candidate that is
greater than the actual positive effect, if any. Similarly, in our clinical trials if allowed to proceed, we may fail to detect toxicity
of, or intolerability caused by, our product candidates, or mistakenly believe that our product candidates are toxic or not well tolerated
when that is not, in fact, the case.
The design of a clinical trial can determine whether
its results will support approval of a product; however, flaws in the design of a clinical trial may not become apparent until the clinical
trial is well advanced or completed. We have limited experience in designing clinical trials and may be unable to design and execute a
clinical trial to support marketing approval. In addition, preclinical and clinical data are often susceptible to varying interpretations
and analyses. Many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials
have nonetheless failed to obtain marketing approval for their product candidates. Even if we believe that the results of clinical trials
for our product candidates warrant marketing approval, the regulatory agencies may disagree and may not grant marketing approval of our
product candidates or may require that we conduct additional clinical studies; the latter would require that we incur significantly increased
costs and would significantly extend the clinical development timeline for our product candidates.
In some instances, there can be significant variability
in safety or efficacy results between different clinical trials of the same product candidate due to numerous factors, including changes
in trial procedures set forth in protocols, differences in the size and type of the patient populations, changes in and adherence to the
clinical trial protocols and the rate of dropout among clinical trial participants. Any Phase 1, Phase 2 or Phase 3 clinical trial we
may conduct may not demonstrate the efficacy or safety necessary to obtain regulatory approval to market our product candidates.
Additionally, any positive results of preclinical
studies and early clinical trials of a drug candidate may not be predictive of the results of later-stage clinical trials, such that drug
candidates may reach later stages of clinical trials and fail to show the desired safety and efficacy traits despite having shown indications
of those traits in preclinical studies and early-stage clinical trials. A number of companies in the biopharmaceutical industry have suffered
significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results
in earlier phases of the trials. Therefore, the results of any ongoing or future clinical trials we conduct may not be successful.
We may experience significant delays in pursuing
any clinical trials, and any planned clinical trials may not begin on time, may require redesign, may not enroll sufficient healthy volunteers
or patients in a timely manner and may not be completed on schedule, if at all.
Our clinical trials may be delayed, suspended
or prematurely terminated because costs are greater than we anticipate or for a variety of other reasons, such as:
· inability to monitor trial participants adequately during or after treatment;
Further, we may also encounter delays if a clinical
trial is suspended or terminated by us, by any IRB or ethics committee, by a DSMB, or by the FDA or other regulatory authority. A suspension
or termination may occur due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements,
inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities, exposing participants to health
risks caused by unforeseen safety issues or adverse side effects, development of previously unseen safety issues, failure to demonstrate
a benefit from using a drug candidate or changes in governmental regulations or administrative actions. We cannot predict with any certainty
the schedule for commencement or completion of any currently ongoing, planned or future clinical trials.
Many of the factors that cause, or lead to, a
delay in the commencement or completion of clinical trials may also ultimately lead to the denial of marketing approval for our product
candidates.
If we experience delays in the commencement or
completion of, or suspension or termination of, any clinical trial for our drug candidates, the commercial prospects of the drug candidate
could be harmed, and our ability to generate product revenues from the drug candidate may be delayed or eliminated. In addition, any delays
in completing our clinical trials will increase our costs, slow down our drug candidate development and approval process and jeopardize
regulatory approval of our drug candidates and our ability to commence sales and generate revenues. The occurrence of any of these events
could harm our business, financial condition, results of operations and prospects significantly.
We are seeking FDA approval to commence
clinical trials in the U.S. of certain of our product candidates based on clinical data that was obtained in trials conducted outside
the U.S., and it is possible that the FDA may not accept data from trials conducted in such locations or conducted nearly 20 years ago.
In support of our IND application to commence
a clinical trial in LAPC using genetically engineered live human cells encapsulated using our Cell-in-a-Box® technology
in combination with ifosfamide we are relying on a Phase 1/2 clinical trial and a clinical trial previously conducted using the same technology
in combination with ifosfamide between 1998 and 1999 and between 1999 and 2000, respectively. The Phase 1/2 clinical trial was carried
out at the Division of Gastroenterology, University of Rostock, Germany, and the Phase 2 clinical trial was carried out at four centers
in two countries in Europe: Berne, Switzerland, and in Rostock, Munich and Berlin, Germany.
Although the FDA may accept data from clinical
trials conducted outside the U.S., acceptance of this data is subject to certain conditions imposed by the FDA. There is a risk that the
FDA may not accept the data from the two previous trials. In that case, we may be required to conduct a Phase 1 or a Phase 1/2b clinical
trial rather than the planned Phase 2b clinical trial in LAPC, currently under clinical hold. This may result in additional costs to us
and resultant delays in the regulatory review process and any future commercialization and marketing if regulatory approval is obtained.
It is not known whether the FDA would be likely to reject the use of such clinical data due to the significant time that has elapsed since
the earlier clinical trials were conducted or because the clinical trial material for our proposed clinical trial is different from that
used in the earlier clinical trials because of cloning the cells used in the earlier trials and certain other modifications and improvements
that have been made to the Cell-in-a-Box® technology since the time of the earlier trials.
Results in previous clinical trials of our
encapsulated live cell and ifosfamide combination for pancreatic cancer may not be replicated in future clinical trials which could result
in development delays or a failure to obtain marketing approval.
Results in the previous Phase 1/2 and Phase 2
clinical trials of the encapsulated live cell and ifosfamide combination product may not be predictive of similar results in future clinical
trials such as our planned clinical trial in LAPC, if allowed to proceed. The previous Phase 1/2 and Phase 2 clinical trials had a relatively
limited number of patients in each trial. These trials resulted in outcomes that were not statistically significant and may not be representative
of future results. In addition, interim results obtained after a clinical trial has commenced do not necessarily predict results in future
clinical trials. Numerous companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage
clinical trials even after achieving promising results in early-stage clinical development. Our clinical trials, if allowed to proceed,
may produce negative or inconclusive results and we may decide, or regulatory agencies may require us, to conduct additional clinical
trials. Moreover, clinical data are often susceptible to varying interpretations and analyses, and many companies that believed their
product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain the approval
for their products by the regulatory agencies.
The review processes of regulatory
authorities are lengthy, time consuming, expensive and inherently unpredictable. If we are unable to obtain approval for our drug candidates
from applicable regulatory authorities, we will not be able to market and sell those drug candidates in those countries or regions and
our business could be substantially harmed.
The research, testing, manufacturing, labeling,
approval, sale, marketing and distribution of drug products are, and will remain, subject to extensive regulation by the FDA in the U.S.
and by the respective regulatory agencies in other countries where regulations differ. We are not permitted to market our product candidates
in the U.S. until we receive the respective approval of an NDA or BLA from the FDA, or in any foreign countries until we receive the requisite
approval from the respective regulatory agencies in such countries. The time required to obtain approval, if any, by the FDA, EMA, and
comparable foreign authorities is unpredictable, but typically takes many years following the commencement of clinical trials, if approval
is obtained at all, and depends upon numerous factors, including the substantial discretion of the regulatory agencies and the type, complexity
and novelty of the product candidates involved. Regulatory agencies have substantial discretion in the approval process and may refuse
to accept any application or may decide that our data are insufficient for approval and require additional nonclinical studies or clinical
trials. We have not submitted a marketing application to the FDA, EMA or any similar regulatory agency in any other jurisdiction. We have
limited experience in planning and conducting the clinical trials required for marketing approvals, and we have and expect to continue
to rely on third-party CROs to assist us in this process. Obtaining marketing approval requires the submission of extensive nonclinical
and clinical data and supporting information to regulatory agencies for each therapeutic indication to establish the product candidate’s
safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing process,
and in many cases the inspection of manufacturing, processing and packaging facilities by the regulatory agencies. Our product candidates
may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other
characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use, or there may be deficiencies in
cGMP compliance by us or by our third-party manufacturers that could result in the candidate not being approved. Moreover, we have not
obtained regulatory approval for any drug candidate in any jurisdiction and it is possible that none of our existing drug candidates or
any drug candidates we may seek to develop in the future will ever obtain regulatory approval.
Our drug candidates could fail to receive, or
could be delayed in receiving, regulatory approval for many reasons, including any one or more of the following:
The time and expense of the approval process,
as well as the unpredictability of future clinical trial results and other contributing factors, may result in our failure to obtain regulatory
approval to market, in one or more jurisdictions, for the product candidates we are currently developing or may seek to develop in the
future, which would significantly harm our business, results of operations and prospects. In such case, we may also not have the resources
to conduct new clinical trials and/or we may determine that further clinical development of any such drug candidate is not justified and
may discontinue any such programs.
In addition, even if we were to obtain regulatory
approval in one or more jurisdictions, regulatory agencies may approve any of our product candidates for fewer or more limited indications
than we request, may not approve prices we may propose to charge for our products, may grant approval contingent on the performance of
costly post-marketing clinical trials (referred to as “conditional” or “accelerated” approval depending on the
jurisdiction), or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the
successful commercialization of that product candidate or that includes significant warnings or contraindications. Any of the foregoing
circumstances could materially harm the commercial prospects for our product candidates.
If we experience delays or difficulties
in the enrollment of patients in clinical trials, we may not achieve our clinical development timeline and our receipt of necessary regulatory
approvals could be delayed or prevented.
We may not be able to initiate or continue clinical
trials for our product candidates if we are unable to locate and enroll enough eligible patients to participate in our clinical trials.
In particular, for some diseases and conditions we are or will be focusing on, our pool of suitable patients may be smaller and more selective
and our ability to enroll a sufficient number of suitable patients may be limited or take longer than anticipated. In addition, some of
our competitors may have ongoing clinical trials for drug candidates that treat the same indications as our drug candidates, and volunteers
or patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ drug
candidates.
Patient enrollment is a significant factor in
the overall duration of a clinical trial and is affected by many factors, including:
· The size and nature of the patient population;
· The severity of the disease under investigation;
· The proximity of patients to clinical sites;
· The eligibility criteria for the trial;
· The design of the clinical trial;
· Efforts to facilitate timely enrollment;
· The patient referral practices of physicians;
· Competing clinical trials for the same patient population; and
Our inability to enroll enough patients for our
clinical trials could result in significant delays or may require us to abandon one or more clinical trials altogether. Enrollment delays
in our clinical trials may result in increased development costs for our product candidates, delay or halt the development of and approval
processes for our product candidates and jeopardize our ability to achieve our clinical development timeline and goals, including the
dates by which we will commence, complete and receive results from clinical trials. Enrollment delays may also delay or jeopardize our
ability to commence sales and generate revenues from our product candidates., if approved Any of the foregoing could cause the value of
our company to decline and limit our ability to obtain additional financing, if needed.
We may request priority review for our product
candidates in the future. FDA may not grant priority review for any of our product candidates. Moreover, even if FDA designated such products
for priority review, that designation may not lead to a faster regulatory review or approval process and, in any event, does not assure
regulatory approval of the product.
We may be eligible for priority review designation
for our product candidates if the regulatory agencies determine such product candidates offer major advances in treatment of a serious
disease or condition or provide a treatment for a serious disease or condition where no adequate therapy exists. For a description of
priority review designation, see “Government Regulation – Fast Track, Breakthrough Therapy and Priority Review Designations.”
FDA has broad discretion with respect to whether
to grant priority review status to a product candidate, so even if we believe a product candidate is eligible for such designation or
status, FDA may decide not to grant it. Thus, while FDA has granted priority review to other oncology products, our product candidates,
should we request priority review designation for them, may not receive such designation. Moreover, even if one of our product candidates
is designated for priority review, such a designation does not change the standards for product approval and does not necessarily mean
a faster overall regulatory review process or necessarily confer any advantage with respect to approval compared to the standard FDA review
process.
Receiving priority review from the regulatory
agencies does not guarantee approval within an accelerated timeline or thereafter.
In some instances, we believe we may be
able to secure approval from FDA to use accelerated development pathways. If we are unable to obtain such approval, we may be required
to conduct additional preclinical studies or clinical trials beyond those that we contemplate which could increase the expense of obtaining
and delay the receipt of necessary marketing approvals.
We anticipate that we may seek an accelerated
approval pathway for certain of our product candidates. For a description of the accelerated approval pathway, see “Government Regulation
– Accelerated Approval Pathway.”
Prior to requesting accelerated approval, we will
seek feedback from the FDA and will otherwise evaluate our eligibility to use the accelerated approval pathway. There can also be no assurance
that after our evaluation of the feedback and other factors we will decide to pursue or submit an NDA or a BLA, as applicable, for accelerated
approval or any other form of designation or program intended to expedite the product development, review or approval processes. Similarly,
there can be no assurance that after subsequent feedback from the FDA that we will continue to pursue or apply for accelerated approval
or any other form of designation or expedited program, even if we initially decide to do so. Furthermore, if we decide to apply for accelerated
approval or under another expedited regulatory designation (such as the Breakthrough Therapy designation or Fast Track designation), there
can be no assurance that such submission or application will be accepted or that any expedited development, review or approval will be
granted on a timely basis or at all. The FDA could also require us to conduct further studies prior to considering or grantingour application
or granting approval of any type and may require us to have a confirmatory trial to verify the clinical benefit of the product underway
and partially or fully enrolled before granting approval. We might not be able to fulfill the FDA’s requirements in a timely manner,
which would cause delays, or approval might not be granted because our submission is deemed incomplete by the FDA.
Even if we receive accelerated approval from the
FDA, we will be subject to rigorous post-marketing requirements, including the completion of confirmatory post-market clinical trials,
submission to the FDA of periodic progress reports on confirmatory trials, and submission to the FDA of all promotional materials prior
to their dissemination. The FDA could seek to withdraw any product approval granted through the accelerated approval pathway for multiple
reasons, including if we fail to conduct any required post-market study with due diligence; a post-market study does not confirm the predicted
clinical benefit; other evidence shows that the product is not safe or effective under the conditions of use; or we disseminate promotional
materials that are found by the FDA to be false and misleading. Under the Consolidated Appropriations Act for 2023, the FDA may use expedited
procedures to withdraw any product for which we receive accelerated approval if our confirmatory trials fail to verify the purported clinical
benefits.
A failure to obtain accelerated approval or any
other form of designation or program intended to expedite product development, review or approval for any of our product candidates that
we determine to seek accelerated approval or designation for would result in a longer time to commercialization of such product candidate,
could increase the cost of development of such product candidate and could harm our competitive position in the marketplace.
We currently have Orphan Drug designation
for our product candidate for the treatment of pancreatic cancer, and may seek Orphan Drug designation for additional product candidates,
and we may be unsuccessful in obtaining or maintaining such designations.
The FDA or EMA may designate drugs for relatively
small patient populations as Orphan Drugs. We have been granted Orphan Drug designation for our product candidate for the treatment of
pancreatic cancer in the U.S. and European Union. For a description of orphan drug designation in the U.S., see “Government Regulation
– Orphan Drug Status.” For a description of orphan drug designation in the European Union, see “Government Regulation
– Regulation Outside of the U.S. – European Union orphan designation and exclusivity.”
Although we have received Orphan Drug designation
for our pancreatic cancer product candidate, there is no guarantee that the product candidate will be successfully approved by the FDA
or the EMA for such indication, that the product, if approved, will be commercially successful in the marketplace, or that another product
will not be approved for the same indication ahead of our product candidate. Orphan Drug exclusivity may be lost if a regulatory agency
determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of
the drug to meet the needs of patients with the rare disease or condition. Marketing exclusivity for a product designated as an Orphan
Drug may not effectively protect the product candidate from competition because different drugs can be approved for the same rare disease
or condition, and the same drug may be approved for a different condition that may be used off-label for an orphan indication. Even after
an Orphan Drug is approved and granted exclusivity, the regulatory agency can subsequently approve the same drug or biological substance
in a different product for the same condition if they conclude that the later product is clinically superior in that it is shown to be
safer, more effective or makes a major contribution to patient care.
A Fast Track by the FDA or similar designation
by another regulatory agency, even if granted for any of our product candidates, may not lead to a faster development or regulatory review
or approval process and does not increase the likelihood that our product candidates will receive marketing approval.
We do not currently have Fast Track designation
by the FDA or similar designation by another regulatory agency for any of our product candidates but intend to seek such designation based
upon the data generated from our clinical trials, if allowed to proceed and if successful. For a description of Fast Track designation,
see Government Regulation Fast Track, Breakthrough Therapy and Priority Review Designations.
Even if we believe a product candidate is eligible
for Fast Track or any similar designation, we cannot assure you that FDA or any other regulatory agency would decide to grant it. Even
if we do receive Fast Track or similar designation, we may not experience a faster development process, review or approval compared to
conventional procedures adopted by a regulatory agency. In addition, a regulatory agency may withdraw Fast Track or any similar designation
if it believes that the designation is no longer supported by data from our clinical development program. Many product candidates that
have received Fast Track designation have failed to obtain marketing approval.
A Breakthrough Therapy designation by the
FDA or similar designation by another regulatory agency, even if granted for any of our product candidates, may not lead to a faster development